Ruth Lea: As the EU squabbles, the Commonwealth looks even more enticing

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Last week’s events were extraordinary. It may well be that it will be remembered as the week when “events, dear boy, events” began to shape Britain’s future as a country free of the EU’s crippling bureaucracy and bickering politicians.

Starting with last week’s EU summit there are probably four main conclusions to be drawn from the outcome. The first is that the painfully negotiated rescue package will not save the Eurozone in its current configuration. There was nothing in the deal to help Europe’s economies under stress. But it does give the beleaguered currency bloc more time to contemplate its future.

The second is that the negotiations in the lead-up to the deal were fraught in the extreme. Most of the negotiating ahead of the summit was, of course, done by the Chancellor Merkel and President Sarkozy, with the other EU leaders notable by their absence. The EU appears to be more dominated by the Franco-German partnership than ever. But even this relationship was tense. The gulf between France and Germany was obvious for all to see. There were major differences between Merkel and Sarkozy concerning all three aspects of the deal – the recapitalisation of the banks, the enhanced EFSF and the decisions about Greece. Suffice to say, Merkel basically called the shots, exposing France’s economic and fiscal vulnerabilities. But at least Merkel and Sarkozy maintained a unified and civil face to the world. Sarkozy’s attack on Greece and the smirking Franco-German dismissal of Signor Berlusconi were unedifying.

The third is that as the Eurozone crisis morphs from grizzly stage to grizzly stage, it is inevitable that the Eurozone leaders should seek closer cooperation. Britain’s exclusion from the main action last week was inevitable. Moreover, the “saving of the Euro” – the great project without which it is claimed that Europe will collapse into war and pestilence – will continue to dominate EU activities for the foreseeable future. Britain’s position can only become more peripheral in the EU and our influence decline. Whilst we are still a member this is not a happy position to be in. We risk being marginalised. And whilst the idea of boosting relations with other “outs” may appear appealing, EU power is at the core of the Eurozone.

Finally, the EU’s overtures to China to invest in the EFSF were seen as a symbol of the changing global order. One of our leading newspapers opined that this was “a turning point of historic magnitude”, and referred to “Europe’s diminished global place”. Indeed this is true. Europe may have been the future once, but with its heavy indebtedness, sclerotic economies and adverse demographics it most certainly isn’t the future now. Europe, too comfortable with and too complacent about its competitiveness-destroying socialism, is paying the price.

Meanwhile, European matters move ahead here. Of course I supported the MPs of all parties who voted last Monday night for a referendum on our relationship with Europe. And of course I agree with the Prime Minister’s comments about the EU’s “constant attack” on the City. The flood of financial regulation from the EU and the increasing regulatory intervention from the EU’s supervisory bodies (on banking, securities and insurance and occupational pensions) show no signs of abating. When Tony Blair signed up to the Financial Services Action Plan in 1998 he effectively gave away control over the City of London to Brussels. Without wishing to appear paranoid Brussels’ plans for a City-damaging Financial Transactions Tax, supported by France and Germany, look positively vindictive.

But, truth to tell, the regulatory onslaught on the City is just part of the Single Market which, one cannot repeat too many times, imposes more costs on this country than showers benefits. I am mystified by the continuing support for this misguided enterprise – and even more mystified by the notion that “completing the Single Market” will somehow release energy and spur growth. We can see what happens when Brussels moves to “complete” the Single Market as it is doing in financial services now. There are more rules, there is more central supervision and there is the inexorable slide towards a single rule book for the EU, “one size fits all”, which is simply absurd. The Single Market is not primarily about free trade: the French abhor such wild, Anglo-Saxon concepts. It is about harmonised regulations, controlled markets and the competitiveness-killing Social Market Model. And the employment and social legislation which the Prime Minister wishes to repatriate (rightly) is an intrinsic part of the Single Market.

I note that Whitehall is “reviewing every aspect” of Britain’s membership of the EU in support of the Prime Minister’s promises to bring back powers from Brussels. I welcome this move. It is yet another sign that the debate on EU membership is moving forward. But, let us be under no misapprehensions, the Government is building up a head of steam of expectations and, if as I expect, the EU leaders reject any repatriation of powers pressure for withdrawal can only increase. The genie is out of the bottle.

Last but not least, the Commonwealth has been in the news this week. The Queen’s tour of Australia has been a triumph in every way and symbolic of the goodwill between Britain and the other Commonwealth countries. There must be an increasing number of people who feel that this country made a blunder of historical proportions when we joined the EEC in 1973 and betrayed the Commonwealth. We backed the wrong horse. As I have argued before, the Commonwealth in its richness and diversity mirrors today’s global economy in a way that the EU simply cannot start to aspire to. In its global reach it speaks of the future, and should not be regarded as a curious relic of Empire, whereas the EU will continue its inexorable, relative decline.

As I watched the proceedings at the Commonwealth Heads of Government Meeting (CHOGM) in Perth, it struck me what a wasted opportunity it all was. The Commonwealth nations, taken together and including the UK, are an economic colossus comprising some 15% of world GDP, 54 member states (53 excluding Fiji, which is currently suspended) and two billion citizens. If we were free of the EU with its limiting and limited horizons what a dynamic free trade bloc the Commonwealth could be. This country has the good fortune to have uniquely extensive global links for a country of its size.

We are in Europe and we’re being run by Europe. We should run ourselves.